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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Occurs when LRAC is constant over a variety of plant sizes






2. The difference between total revenue and total explicit and implicit costs






3. When firms focus their resources on production of goods for which they have comparative advantage






4. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






5. The price of a good measured in units of currency






6. Total product divided by labor employed. APL = TPL/L






7. The additional benefit received from the consumption of the next unit of a good or service






8. Ei > 1






9. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






10. Entry of new firms shifts the cost curves for all firms upward






11. Ed > 1 - meaning consumers are price sensitive






12. A good for which higher income increases demand






13. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






14. The difference between total revenue and total explicit costs






15. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






16. The mechanism for combining production resources - with existing technology - into finished goods and services






17. AVC = TVC/Q






18. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






19. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






20. Models where firms agree to mutually improve their situation






21. ATC = TC/Q = AFC + AVC






22. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






23. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






24. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






25. Exists if a producer can produce a good at lower opportunity cost than all other producers






26. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






27. The sum of consumer surplus and producer surplus






28. Es = (%dQs) / (%dPrice)






29. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






30. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






31. A legal minimum price below which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent surplus






32. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






33. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






34. Entry of new firms shifts the cost curves for all firms downward






35. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






36. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






37. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






38. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






39. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






40. Models where firms are competitive rivals seeking to gain at the expense of their rivals






41. Exists if a producer can produce more of a good than all other producers






42. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






43. TR = P * Qd






44. Demand for a resource like labor is derived from the demand for the goods produced by the resource






45. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down






46. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






47. The rational decision maker chooses an action if MB = MC






48. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






49. Ed = (%dQd)/(%dP). Ignore negative sign






50. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand